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Chinas growth not as bad as thought!

China grew 6.9% in the three months to September from a year ago vs a 6.8% expected

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
CHINA ECONOMY

The world’s second biggest economy grew faster than anticipated in the third quarter, as decent growth in the services sector helped recover some of the weakness in manufacturing and real estate.

China grew 6.9% in the three months to September from a year ago vs a 6.8% expected. The better than expected figure brought back the debate on whether China is on the path for a slow or hard landing. Some people might not even be convinced with the released figure and they believe Chinese officials understated GDP during the booming economic phases and overstated it in slowdowns like the one we facing now.

According to official data, services grew by 8.4%, meanwhile manufacturing expanded by only 6%. The first warning signal is how services grew at this pace when equity trading collapsed during the third quarter.  When looking at separate data released today, industrial production and fixed asset investments both came below expectations adding another question mark on growth figures.

 

The PBOC had so far cut interest rates four times this year and continued to lower its required reserve ratio to boost lending along with government stimulus plans. Plans to loosen monetary policies likely to continue as China officials targeting 7% growth by end of 2015.

Although Chinese equities had a volatile session ending in red, Europe is feeling more optimistic with all major indices trading higher as Deutsche bank restructures its business and positive earnings from Danone, Matro AG helped the rally.

With no economic releases on the calendar for the rest of the day, traders will be looking at US earnings from Morgan Stanley, Valeant Pharmaceuticals, America Movil, and Halliburton.

Currencies continue to trade in very tight ranges after Chinas GDP release, with biggest winner being the Aussie knowing that Australia is Chinas biggest trading partner. We expect tight trading ranges to carry on during the European and U.S. session with some technical traders benefiting from the small moves. 

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.